Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2004 Commission File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$1,000 per unit, units of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-Q or any amendment to this
Form 10-Q [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
----
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
March 31, 2004 (Unaudited) and
December 31, 2003 3
Statements of Income
Three months ended March 31, 2004
and 2003 (Unaudited) 4
Statement of Partner's Equity (Deficit)
Three months ended March 31, 2004 (Unaudited) 4
Statements of Cash Flows
Three months ended March 31, 2004
and 2003 (Unaudited) 5
Notes to Financial Statements
March 31, 2004(Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK 10
ITEM 4. CONTROLS AND PROCEDURES 10
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
CERTIFICATION EXHIBITS
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEET
MARCH 31,2004 DECEMBER 31, 2003
------------- -----------------
(Unaudited)
ASSETS
Properties:
Land $ 5,280,000 $5,280,000
Buildings And Improvements 25,441,323 25,419,430
Furniture And Fixtures 218,518 218,518
------------ -----------
30,939,841 30,917,948
Less Accumulated Depreciation 14,083,797 13,866,583
------------ -----------
16,856,044 17,051,365
Cash And Cash Equivalents 45,371 258,423
Cash - Security Escrow 305,158 305,158
Unamortized Finance Costs 259,048 280,548
Manufactured Homes and Improvements 1,645,002 1,312,787
Other Assets 1,145,733 1,258,312
------------ -----------
Total Assets $ 20,256,356 $20,466,593
------------ -----------
MARCH 31, 2004 DECEMBER 31, 2003
-------------- -----------------
(UNAUDITED)
LIABILITIES AND PARTNERS' DEFICIT
Line of Credit $ 270,000 $235,000
Accounts Payable 120,807 149,213
Other Liabilities 992,169 885,533
Mortgage Payable 31,479,889 31,576,444
----------- -----------
Total Liabilities $32,862,865 $32,846,190
Partners' Equity (Deficit) :
General Partner (4,355,075) (4,188,993)
Class A Limited Partners (9,576,454) (9,473,234)
Class B Limited Partners 1,325,020 1,282,630
----------- ----------
Total Partners' Deficit (12,606,509) (12,379,597)
----------- -----------
Total Liabilities And
Partners' Deficit $20,256,356 $20,466,593
----------- -----------
See Notes to Financial Statements
3
UNIPROP MANUFACTURED HOUSING INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF INCOME
THREE MONTHS ENDED
March 31,2004 March 31,2003
------------- -------------
(Unaudited) (Unaudited)
Income:
Rental Income $2,037,344 $2,113,837
Home Sale Income 215,485 244,735
Other 104,873 156,108
---------- ----------
Total Income $2,357,702 $2,514,680
---------- ----------
Operating Expenses:
Administrative Expenses
(Including $106,918 and $113,371 in Property
Management Fees Paid to An Affiliate for the Three
Month Period Ended March 31, 2004 and 2003,
Respectively) 551,109 492,948
Property Taxes 243,867 230,940
Utilities 142,882 148,850
Property Operations 291,194 239,355
Depreciation And Amortization 238,714 229,412
Interest 657,298 651,884
Home Sale Expense 196,175 217,474
---------- ----------
Total Operating Expenses $2,321,239 $2,210,863
---------- ----------
Net Income $ 36,463 $ 303,817
---------- ----------
Income Per Limited Partnership Unit:
Class A ($2.10) $ 5.15
Class B $7.34 $14.22
Distribution Per Limited Partnership Unit
Class A $3.00 $ 3.00
Class B $3.00 $ 3.00
Weighted Average Number Of Limited
Partnership Units Outstanding
Class A 20,230 20,230
Class B 9,770 9,770
STATEMENT OF PARTNER'S EQUITY (DEFICIT) (UNAUDITED)
Total General Partner Class A Limited Class B Limited
----- --------------- ---------------- ---------------
Beginning Balance of December 31, 2003 (12,379,597) (4,188,993) (9,473,234) 1,282,630
Net Income 36,463 7,293 (42,530) 71,700
Distributions (263,375) (173,375) (60,690) (29,310)
----------- ---------- ---------- ---------
BALANCE AS OF MARCH 31, 2004 (12,606,509) (4,355,075) (9,576,454) 1,325,020
See Notes to Financial Statements
4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
March 31,2004 March 31, 2003
------------- --------------
Cash Flows From Operating Activities:
Net Income $ 36,463 $ 303,817
--------- ----------
Adjustments To Reconcile Net Income
To Net Cash Provided By
Operating Activities:
Depreciation 217,214 207,912
Amortization 21,500 21,500
(Increase) Decrease in Homes and Improvements (332,215) 37,504
(Increase) Decrease In Other Assets 112,579 (286,561)
Increase (Decrease) In Accounts Payable (28,406) 13,802
Increase (Decrease) In Other Liabilities 106,636 204,557
--------- ----------
Total Adjustments: 97,308 198,714
--------- ----------
Net Cash Provided By
Operating Activities 133,771 502,531
--------- ----------
Cash Flows Used In Investing Activities:
Capital Expenditures (21,893) 0
--------- ----------
Cash Flows From Financing Activities:
Net Borrowing on LOC 35,000 0
Distributions To Partners (263,375) (259,250)
Principal Payments on Mortgage (96,555) (97,029)
--------- ----------
Net Cash Used In (324,930) (356,279)
--------- ----------
Financing Activities
Increase (Decrease) In Cash and Equivalents (213,052) 146,252
Cash and Equivalents, Beginning 258,423 607,207
--------- ----------
Cash and Equivalents, Ending $ 45,371 $ 753,459
--------- ----------
See Notes to Financial Statements
5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 2004 (Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited 2004 financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The balance sheet at December 31, 2003 has been derived from the
audited financial statements at that date. Operating results for the three
months ended March 31, 2004 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2004, or for any other interim
period. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's Form 10-K for the year ended
December 31, 2003.
-6-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its four manufactured
housing communities. On March 25, 1997 the Partnership borrowed $33,500,000 from
Nomura Asset Capital Corporation (the "Financing"). It secured the Financing by
placing liens on its four communities. As a result of the Financing, the
Partnership distributed $30,000,000 to the Limited Partners, which represented a
full return of the original capital contributions of $1,000 per unit.
Liquidity
As a result of the Financing, the Partnership's four properties are mortgaged.
At the time of the Financing, the aggregate principal amount due under the four
mortgage notes was $33,500,000 and the aggregate fair market value of the
Partnership's mortgaged properties was $53,200,000. The Partnership expects to
meet its short-term liquidity needs generally through its working capital
provided by operating activities.
The Partnership's long-term liquidity is based, in part, upon its investment
strategy. The properties owned by the Partnership were anticipated to be held
for seven to ten years after their acquisition. All of the properties have been
owned by the Partnership more than ten years. The General Partner may elect to
have the Partnership own the properties for as long as, in the opinion of the
General Partner, it is in the best interest of the Partnership to do so.
The Partnership has a renewable $1,000,000 line of credit with National City
Bank of Michigan/Illinois (formerly First of America Bank). The interest rate,
on such line of credit, floats 180 basis points above 1 month LIBOR, which on
March 31, 2004 was 1.090%. The sole purpose of the line of credit is to purchase
new and used homes to be used as model homes offered for sale within the
Partnership's communities. Over the past three years, sales of the new and used
model homes has been growing and the General Partner believes that continuing
the model home program is in the best interest of the Partnership. As of March
31, 2004 the outstanding balance on the line of credit was $270,000.
-7-
The quarterly Partnership Management Distribution paid to the General Partner
during the first quarter based on prior quarter results was $150,875, or
one-fourth of 1.0% of the most recent appraised value of the properties held by
the Partnership ($60,350,000 x 1/4 = $150,875).
The General Partner elected to make a total distribution of $112,500 for the
first quarter of 2004 (unchanged from 2003), 80.0% or $90,000, was paid to the
Limited Partners and 20.0% or $22,500 was paid to the General Partner.
While the Partnership is not required to maintain a working capital reserve, the
Partnership has not distributed all the cash generated from operations in order
to build cash reserves. As of March 31, 2004, the Partnership's cash balance
amounted to $45,371. The amount placed in reserves is at the discretion of the
General Partner.
Results of Operations
OVERALL, as illustrated in the tables below, the four properties had a combined
average occupancy of 85% at the end of March 2004, versus 90% a year ago. The
average monthly rent in March 2004 was approximately $477, or 3% more than the
$462 average monthly rent in March 2003 (average rent not a weighted average).
-8-
Total Occupied Occupancy Average*
Capacity Sites Rate Rent
Aztec Estates 645 496 77% $517
Kings Manor 314 305 97 514
Old Dutch Farms 293 239 82 449
Park of the Four Seasons 572 519 91 426
----- ----- -- ----
Total on 3/31/04: 1,824 1,559 85% $477
Total on 3/31/03: 1,824 1,645 90% $462
*Not a weighted average
GROSS REVENUES NET INCOME
3/31/04 3/31/03 3/31/04 3/31/03
Aztec Estates $ 990,005 $ 879,073 $ 336,254 $ 399,320
Kings Manor 424,504 598,064 261,971 298,794
Old Dutch Farms 322,372 392,455 151,841 237,706
Park of the Four Seasons 619,496 643,363 370,788 365,723
----------- ----------- ----------- -----------
2,356,377 2,512,955 1,120,854 $ 1,301,543
Partnership Management: 1,325 1,725 (89,554) (75,818)
Other expenses: -- -- (98,825) (40,612)
Debt Service (657,298) (651,884)
Depreciation and Amortization -- -- (238,714) (229,412)
----------- ----------- ----------- -----------
$ 2,357,702 $ 2,514,680 $ 36,463 $ 303,817
COMPARISON OF QUARTER ENDED MARCH 31, 2004 TO QUARTER ENDED MARCH 31, 2003
Gross revenues decreased $156,978 to $2,357,702 in 2004, as compared to
$2,514,680 in 2003. The decrease was the result of lower occupancy due to weak
economic conditions. (See table in previous section.)
As described in the Statements of Income, total operating expenses were $110,376
higher, moving from $2,210,863 to $2,321,239. The increase was due to an
increase in property operating expenses, property taxes and administrative
expense.
As a result of the aforementioned factors, Net Income decreased, $267,354 for
the first quarter of 2004 compared to the same quarter of the prior year, moving
from $303,817 for 2003 to $36,463 for 2004.
-9-
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise primarily through its borrowing
activities. There is inherent roll over risk for borrowings as they mature and
are renewed at current market rates. The extent of this risk is not quantifiable
or predictable because of the variability of future interest rates and the
Partnership's future financing requirements.
Note Payable: At March 31, 2004 the Partnership had a note payable
outstanding in the amount of $31,479,889. Interest on this note is at a fixed
annual rate of 8.24% through June 2007.
Line-of-Credit: At March 31, 2004 the Partnership owed $270,000 under
its line-of-credit agreement, whereby interest is charged at a variable rate of
1.80% in excess of One Month LIBOR.
A 10% adverse change in interest rates of the portion of the Partnership's debt
bearing interest at variable rates would result in an increase in interest
expense of less than $10,000 annually.
The Partnership does not enter into financial instruments transactions for
trading or other speculative purposes or to manage its interest rate exposure.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Partnership carried out
an evaluation, under the supervision and with the participation of the Principal
Executive Officer and the Principal Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15. Based upon, and as of the date of, this evaluation,
the Principal Executive Officer and the Principal Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed in the quarterly report is recorded,
processed, summarized and reported as and when required.
There was no change in the Partnership's internal controls over financial
reporting that occurred during the most recent completed quarter that has
materially affected, or is reasonably likely to materially affect, the
Partnership's internal control over financial reporting.
-10-
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
The City of Novi, Michigan, on February 11, 2004 filed a lawsuit in
Circuit Court of Oakland County against the Partnership to compel the Old Dutch
Farms community to connect to the City of Novi sanitary sewer system. Legal
counsel for the Partnership is currently in negotiations with the City and DEQ
to resolve this matter. Estimates for the connection fees and the cost of
abandonment of that Property's waste water treatment plant range from $850,000
to $1,000,000.
The City of Novi has agreed to a settlement in this matter. Legal
counsel for the Partnership is currently in negotiations on a settlement.
ITEM 6. REPORTS OF FORM 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during the three
months ended March 31, 2004.
-11-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Uniprop Manufactured Housing
Communities Income Fund,
A Michigan Limited Partnership
BY: P.I. Associates Limited Partnership,
A Michigan Limited Partnership,
its General Partner
BY: /s/ Paul M. Zlotoff
---------------------------------------------
Paul M. Zlotoff, General Partner
BY: /s/ Gloria A. Koster
---------------------------------------------
Gloria A. Koster, Principal Financial Officer
Dated: May 11, 2004
-12-
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
EX-31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
EX-31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
EX-32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
EX-32.2 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.